Milwaukee Biz Blog: Go for it, or punt?

The statistics are overwhelmingly in favor of selling overseas

The Decision:

You are a football coach. Your team has the ball on your own 6 yard line (to score you have to drive the ball 94 yards farther down the field). It’s the 4th down and you have to cross the 11 yard line to get a first down.

Do you go for it, or do you punt?

If you punt, the other team will get good field position and the data shows that 75 percent of the time they will score after such a punt.

However, they will score 90 percent of the time if you go for it and fail to get the first down, which happens about half the time.

Do you go for it, or do you punt?

We know that virtually every coach in every level of football will punt the ball in this situation. There is one exception. At a high school in Little Rock, Arkansas, the coach there never punts on fourth down.

The reason every other coach punts is because as humans we tend to over value downside risk, and under value upside opportunity. Being more of a numbers guy, the coach in Arkansas believes the numbers.

Out of a hundred such fourth down situations described above, when other coaches punt the ball, then the other team scores 75 times. In Arkansas, the coach goes for the first down in all of those one hundred fourth down situations. Half the time the team makes the first down. Of the remaining 50 fourth down situations the other team takes over and scores 90 percent of the time. That’s 45 times.

In Arkansas, having the other team score 45 times is better than having them score 75 times. In the rest of football, it’s the other way around!

Going for it on fourth downs is not the only unusual tactic this coach employs.  Every kickoff is an onsides kick, and they don’t return punts. The school is Pulaski Academy. It has won five state championships since 2003 using these unusual tactics.

Why doesn’t every coach employ statistical based tactics? It is because, as humans, we find it very difficult to overcome our natural tendency to overweigh risk and thus the coaches will follow tactics that feel less risky even when they’re not.

The same phenomenon affects business leaders facing the prospect of going international. The statistics are overwhelmingly in favor of selling overseas. You grow faster, you become more competitive and innovative, your margins increase, you are more profitable, your valuation multiple goes way up, you’ll be 72 percent more productive on a per employee revenue basis, and you pay better and can hire the cream-of-the-crop workers. In spite of all the data, CEOs of most companies in Wisconsin are encumbered by not being able to overcome their natural sense of risk aversion, and in this case, fear of the unknown. They won’t admit to being risk adverse. Instead, they will say something like, “Right now my domestic activity is keeping me fully occupied, I don’t have the bandwidth to do anything else.”

Of course the real risk is found in not being a strategic exporter. In that case, the data shows that you are several times more likely to go out of business in the next recession, than you would be if you exported!

It’s easy to start down the path of becoming a strategic exporter. Begin by scheduling a free export assessment.  We at the M7 would be happy to arrange an expert to do that for you.

Bill Burnett is the director of the export initiative for the Milwaukee 7. He can be reached at (414) 287-4118 or via email at bburnett@mke7.com.

Comments

  1. Great article, Bill. I would add that 95% of the world’s customers live outside of the USA.